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Cite as: [2008] ScotCS CSOH_7, [2008] CSOH 7, [2008] ScotCS CSOH_07, [2008] CSOH 07, [2008] ScotCS CSIH_07

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OUTER HOUSE, COURT OF SESSION

[2008] CSOH 7

P1006/07

OPINION OF LORD OSBORNE

in the Petition of

(FIRST) SCOTTISH WIDOWS INVESTMENT PARTNERSHIP GROUP LIMITED and (SECOND) SCOTTISH WIDOWS INVESTMENT PARTNERSHIP LIMITED

Petitioners;

against

(FIRST) MICHAEL CHANNING, (SECOND) THOMAS LAIDLAW and (THIRD) CORDATUS PARTNERS LIMITED

Respondents:

for

Orders under the Administration of Justice (Scotland) Act 1972, section 1

________________

Petitioners: Lake; Maclay Murray & Spens LLP

Respondents: MacNeill, Q.C.; MacRoberts

16 January 2008

The background circumstances

[1] The petitioners in this petition under section 1 of the Administration of Justice (Scotland) Act 1972, "the 1972 Act", are part of a group of companies that provides, among other things, services to investment funds. The first-named petitioners are the holding company for a number of other companies through which such services are provided. The second-named petitioners are one of the subsidiaries of the first-named petitioners. It acts as investment managers for certain trusts. It enters into investment management agreements with the trustees of trusts, to whom services of investment management are provided. Fees are charged for the provision of these services. Until the events out of which the present petition has arisen, it provided investment management services to U.K. Balanced Property Trust Limited, "the Trust".

[2] The first and second-named respondents and a Mr. Michael Cunningham were formerly employed by the first-named petitioners and were engaged wholly in the business of the second-named petitioners. The second-named respondent held the senior position of Head of Property. He was the main client relationship contact with the Trust. The first-named respondent held the position of Deputy Head of Property and Senior Property Investment Manager. He advised the Trust in relation to investment property and discussed investment strategy with the representatives of the Trust. Michael Cunningham was employed as an Investment Director. He worked exclusively as the Fund Manager for the Trust and worked with the first and second-named respondents.

[3] The terms and conditions of the contracts of employment between the first-named petitioners and the first and second-named respondents are set out in copies of those contracts, which are 6/2 and 6/1 of process. Both of those contracts placed restrictions on the activities that might lawfully be undertaken by the employees during the time when they were employed and also for a period of six months thereafter. In addition, there was an implied obligation of fidelity in the contracts of employment. The restrictions concerned are, so far as relevant, to be found in paragraphs 1.1.1.2, 1.1.1.3 and 1.1.1.4 of Schedule 2 to those contracts of employment. They are in the following terms:

"1.1 ... Therefore, .... you will not during the period of your employment with the Company and for a period of six months after the date on which your employment terminates ... either directly, or indirectly through any other person, firm or other organisation:

...

1.1.1.2 solicit business which is of the same or similar nature as the business with which you were involved during the last year of your employment with the Company (such business referred to as the 'Business') from any person, firm or other organisation which at the time during the last year of your employment with the Company was a customer, investment fund (including, but not limited to unit trust, investment trusts and investment bonds) or client of the Company or a group company (and with whom you were actively involved during that time) and you will not approach any client, investment fund or customer for that purpose or authorise or approve the taking of such actions by any other person. For the purposes of this restriction, the expression customer or client shall include all persons from whom the Company or a group company has received enquiries for the provision of goods or services where such enquiries have not been concluded;

1.1.1.3 employ or engage or otherwise solicit, entice or induce any senior employee of the Company or a group company who has a function that is not purely administrative to become employed or engaged by you or any other person, firm or other organisation and you will not approach any such employee for such purpose or authorise or approve the taking of such actions by any other person; and

1.1.1.4 within the United Kingdom be employed or engaged or otherwise interested in a business which is the same as or similar to the Business."

[4] On 31 July 2006, the first and second-named respondents tendered notice of their intention to resign from their employment. In terms of their contracts they were subject to a six month notice period. The first-named respondent was placed on "garden leave" as from 11 September 2006. The second-named respondent was placed on similar leave from 13 October 2006. When their notice of intention to resign was acknowledged and when they were put on garden leave, both of the respondents were reminded of the restrictions placed upon them in their contracts of employment. Mr. Michael Cunningham tendered notice of his intention to resign from his employment on 6 November 2006. In terms of his contract of employment, he was obliged to give three months notice. In paragraph 10 of the Statement of Facts upon which this petition is based, the petitioners aver that the first and second-named respondents have acted in breach of their contracts. Those allegations are specified in this way:

"During the period when they were employed or within six months thereafter Mr. Channing and Mr. Laidlaw solicited, enticed or induced Mr. Cunningham to become employed by their new venture or authorised or approved others to solicit, entice or induce him to that end. During the period when they were employed Mr. Channing and Mr. Laidlaw were engaged or interested in a business the same as or similar to that with which they were involved in the last year of their employment. They were involved in the business which is now to be carried on by Cordatus (Cordatus Partners Limited). That business is the same or similar to that carried on by the petitioners. During the period when they were employed or within six months of the termination of their employment Mr. Channing and Mr. Laidlaw solicited business from the Trust which was of the same nature as that with which they were involved in the last year of their employment, or authorised or approved the taking of such action by others. The Trust was an organisation which, during the last year of their employment, had been a customer of the petitioners and with whom they had been involved."

As I understand it, those averments of breach of contract are made as a matter of inference from earlier averments made by the petitioners in paragraphs 6, 7, 8 and 9 of the Statement of Facts in the petition.

[5] In paragraphs 11 to 15 of the Statement of Facts, the petitioners aver the basis upon which the orders sought in the prayer are said to be justified. It is claimed that, as a result of the actions of the first and second-named respondents in breach of their contracts of employment, the petitioners have suffered loss. It is said to be likely that proceedings in respect of that loss will be raised against, inter alia, those respondents.

[6] In the prayer of the petition, the petitioners seek essentially authority for the making of copies of certain computer hard drives and memories, certain other media for the storage of electronic data and the recovery of certain documents falling within the categories specified in the annex to the petition. The circumstances in which that is said to be justified are specified in paragraphs 12 and 13 of the Statement of Facts.

The procedure followed in the petition so far

[7] The petition came before the Lord Ordinary on 13 April 2007, who, being satisfied that it was appropriate to make an order under section 1 of the 1972 Act made an order for intimation and service; appointed certain Commissioners; granted commission and diligence; ordered the Commissioners to furnish certain explanations to havers; granted warrant to and authorised the Commissioners to enter the specified premises; and to make one copy of the whole contents of certain computer hard drives and/or memories of computers or other electronic devices and any media for the storage of electronic data and also to search for and take all other steps which they considered necessary to take possession of documents falling within the categories specified in the annex to the petition.

[8] Following the pronouncement of the interlocutor of 13 April 2007, the three Commissioners appointed performed the tasks appointed to them. Their reports are Nos. 9, 10 and 11 of process. In due course answers to the petition were lodged on behalf of the respondents. On 12 June 2007, the Lord Ordinary allowed time for the adjustment of the petition and answers and appointed the case to a hearing in the form of a debate. There followed an amendment procedure, which was concluded on 12 October 2007, the date on which the hearing commenced. Due to lack of time on that date, the hearing was adjourned to and completed on 20 December 2007.

Submissions of the petitioners

[9] At the hearing, counsel for the petitioners moved the court to grant the prayer of the petition, in so far as it had not already been granted. The petitioners' pleas-in-law ought to be sustained. He drew attention to the terms of section 1 of the 1972 Act. He stated that the issue that had been focused was whether, in the circumstances, civil proceedings of the kind contemplated by the petitioners were "likely to be brought". If they were, then the orders sought should be granted. He drew my attention to relevant authorities. The first of these was Pearson v The Educational Institute of Scotland 1997 S.C. 245. That case was concerned with an application for an order under section 1(1A)(b) of the 1972 Act; however, that was immaterial for the present purposes since that provision also referred to "civil proceedings which appear to the court to be likely to be brought". It was held by the Second Division that, for a petition to succeed under section 1(1A)(b), there had at least to be a statable case which an applicant was in a position to make against the defender, even if the identity of that defender was not known for the time being; that that presupposed the availability to the applicant of responsible legal advice as to the nature of the averments which would be required in order to make such a case and whether the available information, apart from the identity of the defender, was sufficient for that purpose. Counsel founded particularly upon observations in the Opinion of the Court between pages 247 and 252. The reason why no order was made in that case was that there was a gap in the pursuer's case. However the test formulated there was applicable to such cases generally. In Harwood v Jackson 2003 S.L.T. 1026, in the Outer House the approach explained in the former case had been approved in relation to an application under section 1(1) of the 1972 Act. Reference was made to paragraph 8 of the Opinion at page 1029 and paragraph [11] at page 1030. Counsel also relied on Parks v Tayside Regional Council 1989 S.L.T. 345 at pages 346 to 347.

[10] Counsel next turned to examine the averments which had been made in the petition in association with the relevant documents, noting, in particular, the contractual restraints imposed upon the first and second-named respondents, to which I have already referred. In doing so, he recognised that the petitioners' case was, in essence, a circumstantial one. He invited the court to draw inferences concerning breaches of contract on the part of the first and second-named respondents from the circumstances averred in paragraphs 5 to 9 of the Statement of Facts in the petition.

[11] Counsel laid emphasis on the averments made in paragraph 6, in association with the affidavit by Mr. John Brett, 6/31 of process. Reference was also made to the circumstances described in paragraphs 7 and 8 of the Statement of Facts.

[12] Paragraph 10 of the Statement of Facts set forth the nature of the breaches of contract alleged. It was submitted that the averments which the petitioners had made satisfied the test which was applicable to cases of this kind. Paragraph 11 of the Statement of Facts referred to loss sustained in consequence of the alleged breaches. It was acknowledged that the averments made there were not very specific. However, that had to be seen against the background that the investment management agreement with the Trust had been worth £4.2m per annum to the petitioners. What was striking in the situation was that the Trust tendered to the second-named petitioners a letter terminating their appointment as investment managers on 15 February 2007, within a very short period of the expiry of the restrictive covenants in the contracts of employment. That chronological sequence of events suggested that prior to the expiry of those covenants, the first and second-named respondents had been involved in the breaches of contract alleged.

[13] Counsel recognised that there might be thought to be difficulties for the petitioners in respect that the employers of the first and second-named respondents had been the first-named petitioners, while the second-named petitioners had been the investment managers and had received the fees for that service. He explained that a concluded view had not, as yet, been reached concerning the effect of that state of affairs. The second-named petitioners were a wholly owned subsidiary of the first-named petitioners. The first-named petitioners might be able to be seen as agents of the second-named petitioners in regard to the engagement of employees. On another approach, upon the basis of the principle of ius quaesitum tertio, the second-named petitioners might be in a position to enforce the contract entered into by the first-named petitioners. It was not contemplated that the arrangements described would create insuperable difficulty as regards the recovery of loss for the alleged breaches of contract. Counsel indicated that the remaining Statement of Facts were concerned with procedure in relation to the recovery of the relevant material and were not relevant at this stage.

[14] Counsel moved on to consider the answers which had been lodged to the petition. He submitted that what had been said in them was of little relevance to the question of whether a prima facie case had been demonstrated by the petitioners. Certain areas of fact were the subject of dispute, both as regards primary facts and the inferences that could reasonably be drawn from them. Those matters were not appropriate for determination now, but would be in the contemplated future proceedings. In order to succeed in resisting the petition, the respondents had to be able to identify a fundamental shortcoming in the petitioners' case. The answers of the respondents to the petitioners' Statement of Facts were, in general not destructive of the petitioners' prima facie case. Much of what was averred in answer was irrelevant to that case, including the alleged discontent referred to in answer 10. Counsel accepted that the Property Opportunities Fund referred to in that answer would not have been in competition with the second-named petitioners' business. As regards the payment of £1.35m referred to in answer 11, it had not been compensation for loss of business, but was a contractual penalty. In any event, the real issue related primarily to what had been averred by the petitioners, as compared with what might have been averred by the respondents.

[15] Counsel then turned to consider in detail the terms of the prayer of the petition and the associated annex and appendix. Part III of the appendix was of importance. He proceeded to make submissions in detail justifying the scope of that Part.

Submissions on behalf of the respondents

[16] Senior counsel for the respondents moved the court either to dismiss the petition for lack of relevance, or to refuse the prayer of the petition, so far as it had not already been exhausted. Upon the assumption that that motion were not to be granted, any order pronounced should be limited to what was sought in Part VII of the prayer. Part VIII should not be implemented by delivery of the material concerned at this stage. Before that could properly happen, there would require to have been a report from the Commissioners on the outcome of the implementation of Part VII. There might then require to be submissions to the court at a hearing on that report.

[17] However, senior counsel explained that his primary position was that the petition should be refused. As regards the law, he did not think that there was much difference between the position of the petitioners and that of the respondents. However, he drew to my attention the further authority of Colquhoun, Petitioner 1990 S.L.T. 43, particularly the observations of Lord Prosser at pages 44H to 45A. It was not a sufficient basis for the granting of an order under section 1 of the 1972 Act that proceedings were merely a possibility. In that particular case the order sought had been refused. It also showed that the likelihood of proceedings had to be assessed at the time of the making of the application not following the recovery of the material sought. Senior counsel also drew my attention to Dominion Technology Limited v Gardner Cryogenics Limited (No. 1) 1993 S.L.T. 828, another case in which a petition under section 1 of the 1972 Act had been dismissed as irrelevant. Particular reference was made to the observations of Lord Cullen, as he then was, at page 832B-G. What emerged from that case was that, while pleadings in a petition such as this did not require to be scrutinised to the standard which would be required in a debate on relevancy in the contemplated proceedings themselves, scrutiny was required. Turning then to consider the petitioners' averments, senior counsel submitted that there was nothing controversial in paragraphs 1 to 4 of the Statement of Facts; the same was largely true of paragraph 5. It was in paragraph 6 that the formulation of the basis of the proceedings said to be likely to be brought started. The actions and meetings referred to in that paragraph were in fact not significant. The third-named respondent could not properly be described as Cordatus in December 2006. They were merely a shelf company. Equally, the averments in paragraph 7 were insignificant. The inference sought to be drawn from them was strained.

[19] Looking at the terms of the Calls formulated by the petitioners, it was quite unclear what case the petitioners were seeking to establish. In general, it was submitted that the petitioners' averments showed that they were not really aware of the basis of the contemplated action.

[20] Further, the petitioners faced a serious problem, which was unresolved, concerning the recovery of any alleged loss. The first and second-named respondents had been employed by the first-named petitioners, however, the loss referred to appeared to have been sustained by the second-named petitioners. No attempt was made to resolve that problem in the petitioners' averments.

[21] Senior counsel went on to draw attention to the fact that the court had a discretion as to whether the orders sought should be granted. In that connection senior counsel repeated the criticisms which he had already made of the petitioners' averments. He also invited consideration of the averments of the respondents, in association with the documentation produced by them. In this connection he relied on what was said in answer 10 for the third-named respondents. The fact was that, after the resignation of the first and second-named respondents, the Trust had been concerned with the level of service which they could receive from the petitioners. The second-named petitioners appeared to have accepted that their relationship with the Trust was under strain in respect of their concession of more favourable terms than had previously existed in respect of termination of the relationship. Furthermore, the e-mail from Mr. Douglas Armstrong to the first and second-named respondents, dated 11 December 2006, No. 7/1 of process, undermined the petitioners' suspicion that there had been elaborate planning to poach the Trust's business. The Trust had not given notice of the termination of their relationship until 15 February 2007. The fact was that the Trust had taken the initiative following the decision of the first and second-named respondents to depart from their employment to secure their services in a lawful manner. The first and second-named respondents had intended to set up a business of creating and running a property opportunities fund. The history of the transfer of the business of the Trust was set out in answer 10 for the third-named respondents.

[22] A further document of importance was the response by the Trust to the requisition by Scottish Widows Unit Funds Limited of an extraordinary meeting of the Trust to be held on 31 July 2007. The letter from the independent chairman of the Trust, commencing on page 3 of the document, gave a detailed history of the situation which was relevant to the present petition. That document had plainly not been prepared for the purposes of this litigation. What was said in it was quite inconsistent with the inferences that the petitioners invited the court to draw. The document confirmed that in January 2007 the Trust was still listening to the second-named petitioners' proposals regarding the future management of its investments. However, in the end, the Trust was motivated to secure continuity of proper management for their large portfolio of property, of value around £400m. The petitioners had quite failed to respond to the version of events set out in the document concerned. In all these circumstances, the court, in the exercise of its discretion, should take a view that the petitioners' case lacked strength and substance.

[23] Senior counsel then went on to consider what steps had already been taken in terms of the court's initial order and what steps would require to be taken, if the court now granted the order sought. What would now have to be undertaken, if that occurred would be extremely time consuming and expensive. That was a factor which the court should take into account. There was insufficient justification for the taking of those steps. If the petitioners did indeed have the basis of a case against the respondents, they could raise proceedings themselves in the usual way. However, it was contended that they did not, in fact, have the basis of a case; the present exercise was one on which they wished to embark in the hope of finding such a basis. In short, it was a fishing expedition. The prayer of the petition should be refused as a matter of discretion.

Reply

[24] Counsel for the petitioners replied. There was no inconsistency between the test explained in Dominion Technology Limited v Gardner Cryogenics Limited (No. 2) and the subsequent case of Pearson v The Educational Institute of Scotland. In considering the petitioners' case it was not appropriate to focus attention exclusively upon the respondents' averments. The prohibition contained in the contracts of employment was against the soliciting of business. There was nothing in the circular, 7/2 of process, inconsistent with the inference which the petitioners invited the court to draw. The chronological sequence of events suggested that, prior to the expiry of the restrictive covenants, the enterprise which emerged after that date had been conceived and born. There was no doubt that something was happening in January 2007. The court could not determine the merits of the issues between the parties before the completion of the present proceedings. That could be done only in the proceedings contemplated. Counsel then made certain submissions on how expenses would be handled in this case.

The decision

The law

[25] There was little or no dispute between the parties to this petition as regards the law which is applicable to the matter. Section 1(1) of the 1972 Act provides that the court

"shall have power ... to order the inspection, photographing, preservation, custody and detention of documents and other property ... which appear to the court to be property as to which any question may relevantly arise in any existing civil proceedings before that court or in civil proceedings which are likely to be brought, and to order the production and recovery of any such property, the taking of samples thereof and the carrying out of any experiment thereon or therewith."

The controversy in the present petition focused almost exclusively on the words "civil proceedings which are likely to be brought" occurring in section 1(1). The significance of those words have been the subject of consideration in several cases which were cited to me. In Colquhoun, Petitioner Lord Prosser made certain observations of assistance in the application of section 1 of the 1972 Act. At page 44 he said this:

"It is to be observed that in the petitioner's pleadings, there is some suggestion that 'due investigation' might lead one to a position where it was likely that proceedings would be brought. In my opinion, the Act requires the court to take the view that such proceedings are likely to be brought at the time of the application. I do not consider that an order of this type should be granted where such proceedings are merely a possibility, but would be rendered likely on the basis of the documentation recovered."

[26] The crucial words in the statutory provision were the subject of authoritative consideration in Pearson v The Educational Institute of Scotland by the Second Division. Lord Nimmo Smith, delivering the Opinion of the Court, at page 250 said this:

"Before this court, as before the Lord Ordinary, there was no dispute about the construction of the words 'civil proceedings which appear to the court to be likely to be brought' in section 1(1A)(b). This could be taken from a number of Outer House decisions. In Parks v Tayside Regional Council Lord Sutherland accepted submissions, under reference to earlier cases, including Friel v Chief Constable of Strathclyde, that there must be averments which establish an intelligible prima facie case, though full averments of fact to make a relevant case would not be required. There must be disclosure of the nature of the claim which it is intended to make and there must also be shown not only the intention of making it but also that there is a reasonable basis for making it."

He went on at page 252 to say:

"There must at least be a stateable case, or what Lord Sutherland in Parks v Tayside Regional Council called an intelligible prima facie case, which the applicant is in a position to make against the defender, even if the identity of that defender is not known for the time being. We would add that this presupposes the availability to the applicant of responsible legal advice as to the nature of the averments which would be required in order to make such a case, and whether the available information, apart from the identity of the defender, was sufficient for that purpose."

In Dominion Technology Limited v Gardner Cryogenics Limited (No. 1) Lord Cullen said at page 832B-D:

"In an application under section 1 of the 1972 Act in connection with prospective proceedings it is, in my view, plainly necessary that the applicant should do more than set out the nature of the proceedings which he is proposing to raise ... The court requires to be satisfied that the proceedings are 'likely to be brought'; and that as a matter of the exercise of its discretion it is appropriate that the order should be granted. This entails in my view that the applicant requires to make adequate averments as to the substance of and basis for the case which he proposes to make. To accept less than this would not do justice to the terms of section 1 and would create the risk of an order being granted where the applicant did not know if there was a statable case".

[27] The guidance contained in the passages which I have quoted is what I intend to follow in the circumstances here.

[28] The first issue which I have to consider is whether the petitioners have made averments which demonstrate that the proceedings contemplated by them are "likely to be brought". It is evident that the proceedings which the petitioners contemplate are proceedings for the purpose of obtaining damages for breach of contract on the part of the first and second-named respondents, as outlined in paragraph 10 of the petitioners' Statement of Facts. The first serious difficulty which, in my opinion, the petitioners face is that the first and second-named respondents were formerly employees of the first-named petitioners, as appears from paragraph 3 of their Statement of Facts. However, the business of investment management carried on in the petitioners' group and, in particular the business of the management of the investment property of the Trust was carried on by the second-named petitioners. Thus, any loss sustained in consequence of any of the actions of the first and second-named respondents in that business would, prima facie, have been suffered by the second-named petitioners. Yet, they were not parties to the contracts of employment which contained the restrictive covenants relied upon; rather the first-named petitioners were the employers in terms of those contracts. Putting the matter shortly, the first-named petitioners had the right to enforce the restrictive covenants, but the second-named petitioners were the party which might suffer loss in the event of those restrictive covenants having been breached. Counsel for the petitioners endeavoured to persuade me that this difficulty could be overcome in several different ways. However, I remain unpersuaded as regards that matter. In my opinion, no coherent and persuasive explanation was given to the court as to how that difficulty might be overcome. For that reason, if for no other, I am not prepared to hold that the contemplated proceedings are "likely to be brought".

[29] Looking beyond the issues of title to sue and loss, on which I have just commented, the task is to consider whether the petitioners have shown, in their averments in this petition, that they have what was called in Pearson v The Educational Institute of Scotland and in other cases "an intelligible prima facie case". Counsel for the petitioners was frank in accepting that the petitioners' case in the present petition was what he called a circumstantial case. The broad nature of the contemplated proceedings was plainly an action of damages for breach of contract. However, the basis upon which it was being contended that a breach of contract had occurred was by inference from the particular circumstances which the petitioners had averred. Those circumstances are set forth in paragraphs 5 to 9 of the Statement of Facts. I immediately accept that in examining the petitioners' case in this petition, it is not appropriate to apply to it the same rigorous scrutiny as would be applied to the relevance of the averments in the contemplated proceedings themselves, had there been a challenge to their relevance. However, the court does have to be satisfied that those proceedings are likely to be brought, which means that the test set out in, among other cases, Pearson v The Educational Institute of Scotland is met. Looking at the averments in paragraph 5 of the petition, they do not go beyond the bare facts of the resignation of the first and second-named petitioners. In paragraph 6, various averments are made concerning meetings with Mr. Alex Porte and Mr. Peter Arthur, who subsequently became Directors of the third-named respondents. Also, meetings are averred to have occurred with Mr. Douglas Armstrong, a solicitor with Messrs Dickson Minto, W.S. Certain other actions of the first and second-named respondents are also founded upon. It would not be fair to examine those averments in isolation, since they form only part of the circumstances founded upon by the petitioners, but if one does, I find it very difficult to regard what is said in that paragraph as sinister in the context of the background to this case. I take the same view about the averments of the petitioners in paragraph 7 of the Statement of Facts. It appears to me that the significance of the matters there referred to is very limited indeed. So far as the averments in paragraphs 8 and 9 are concerned, of course they relate to events which occurred outwith the period of contractual restriction. No doubt, anticipating what might be said about those matters, in paragraph 9 there are certain averments concerning what might be called general practice where a property or investment manager is seeking to obtain the business of a new client. While such a practice may be followed in a situation where the parties involved have not previously been known to each other, that was not, of course, the case here, so far as the first and second-named respondents and the Trust were concerned. Looking at all of the averments which appear to be the basis upon which it is said that a case of damages for breach of contract is likely to be brought, I remain unpersuaded that what has been averred in the petition can be seen as the basis for an intelligible prima facie case.

[30] Putting the matter in another way, if one looks at the averments of the petitioners in the crucial paragraphs of the Statement of Facts and asks the question whether anything said there is inconsistent with the history of events set forth in the answers to those parts of the Statement of Facts and in the associated documentation, I come to the conclusion that there is no significant inconsistency. It is quite plain that, having left the employment of the first-named petitioners, the first and second-named respondents resolved to commence a new business, which, it is a matter of agreement, would not have been in conflict with contractual restrictions to which they were subject. That intention and the taking of steps to further it appear to me to provide a comprehensible explanation for the events which the petitioners regard as sinister. It is of course necessary to recognise that the end point of the sequence of events was indeed the appointment of the third-named respondent as property manager for the Trust. If there had been no material to illuminate the circumstances in which that came about, the petitioners' position might have been rendered stronger by that event. However, I regard the response to the requisition by Scottish Widows Unit Funds Limited for an extraordinary general meeting of the Trust as a document of considerable significance. That document was, I understand, circulated to the shareholders of the Trust. In that part of the letter from the independent Chairman of the Trust to shareholders to be found on pages 4 and 5 of the document, there is a detailed explanation of the sequence of events which occurred, which, in my opinion, must be accorded considerable credence. The sequence of events set out there appears to me to undermine the inferences which the petitioners asked the court to draw in relation to the events upon which they found. In other words, the events upon which the petitioners found, appear to me to be equally consistent with respect on the part of the first and second-named respondents for the contractual restrictions to which they were subject. Accordingly, for these reasons also, I am not persuaded that the proceedings contemplated by the petitioners are likely to be brought.

[31] Were I to be wrong as regards the inference which it is possible to draw from the petitioners' averments, I would, in any event, as a matter of discretion have been of the view that the petition should be refused. Looking at the averments of the respondents, it appears to me that in certain crucial respects they are supported by documentary material which has been produced. I have already referred to the Trust's response to the requisition for an extraordinary general meeting, 7/2 of process, but there is also the e-mail, which I regard of some importance, dated 11 December 2006, 7/1 of process, from Mr. Douglas Armstrong to the first and second-named respondents. That document seems to me to demonstrate that all concerned were then recognising and respecting the contractual restrictions to which those respondents were subject.

[32] A further factor of some significance in this connection, in my view, is to be found in the averments made by the respondents in answer 11, to the effect that, on or about 15 May 2007, the second-named petitioner was paid compensation of £1.35m. This is averred to have been compensation for the loss of the Trust's business in terms of its investment management agreement with the Trust. Standing the averment about this payment, which is neither admitted nor denied by the petitioners, it becomes a matter of the greatest difficulty to understand what loss the petitioners, or one or other of them, are saying they have sustained as a result of the alleged breaches of contract on the part of the first and second-named respondents.

[33] On the whole matter, my conclusion is that while it is a possibility that certain proceedings may emerge from the sequence of events described in the petition and answers, I cannot regard that as more than a mere possibility. It is plain from what was said in Colquhoun, Petitioner that that would be an insufficient basis upon which to grant the remaining parts of the prayer of this petition.

[34] In all these circumstances I shall sustain the fourth pleas in law for each of the respondents and refuse the prayer of the petition, so far as not already granted.